The fairness of deferred prosecution agreements (DPAs) came under new scrutiny today following the final collapse of attempts to prosecute three former directors on charges of false accounting.
A judge at Southwark Crown Court today threw out the Serious Fraud Office’s (SFO) case against former UK finance director Carl Rogberg. This follows a judgment in December last year when the court dropped charges against two other directors, Chris Bush and John Scouler.
The case related to an alleged hole in Tesco’s accounts. Rogberg was initially due to stand trial with his former colleagues but his case was severed from their trial last summer.
Rogberg was acquitted after the judge, having heard all the prosecution witnesses, ruled there was no evidence on which the case could proceed. His decision was appealed by the SFO but the Court of Appeal confirmed the initial ruling.
The trial's collapse coincides with publication of a DPA and proposed £129m fine that the supermarket agreed with the SFO in 2017. Reporting restrictions on the DPA, imposed during the trials, were lifted this morning. The DPA reveals that, in addition to the £129m fine, Tesco has also agreed to pay £3m investigation costs. The company will also undertake and implement an ongoing compliance programme during the three year term of the DPA.
Rogberg's solicitor, Neil O’May, partner and head of the corporate and white-collar crime team at City firm Norton Rose Fulbright, said his client feels the law has let him down. ‘There must be very real concern, in a case which was investigated for over three years by the SFO, that the accused individuals were put through the ordeal of the trial process when the evidence was not even sufficient to bring the prosecution in the first place,’ he said.
He added that publication of the DPA is ‘plainly wrong’ as it is based on the assumption of the guilt. ‘A bystander may well question the adequacy of the process by which a DPA is agreed by a court before the examination of the evidence has taken place,’ O'May said.
Ross Dixon, partner at Hickman & Rose and who represented Bush, said: ‘Despite being acquitted of all wrongdoing – and as a direct result of the DPA - the SFO now publishes a statement that in effect contradicts these not guilty verdicts. This is an unfair and extraordinary outcome,’ he said, adding that there should be ‘urgent reform’ of the DPA process. ‘We now have two contradictory outcomes: that of the criminal trial in which the allegations were dismissed for lack of evidence, and the DPA, based on the same allegations, which tells a different story.’
Iskander Fernandez, partner at City firm BLM, said today’s development will fuel criticism of the SFO. 'While corporate admission with a view to entering into a DPA does not necessarily mean that connected individuals are presumed guilty, the statement of facts behind the DPA will, for many, be an interesting read - particularly companies who may show reluctance to strike a deal with the SFO, and take their chances in court.’
Lisa Osofsky, Director of the Serious Fraud Office said: 'Tesco dishonestly created a false account of its financial position by overstating its profits. The DPA clearly outlines the extent of this criminal conduct for which the company has accepted full responsibility.'